Laying down modalities for auction of 15 iron ore mines in Karnataka, the Supreme Court on Thursday allowed state-run and private companies...

Laying down modalities for auction of 15 iron ore mines in Karnataka, the Supreme Court on Thursday allowed state-run and private companies having “end users plants” engaged in producing sponge and pig iron, steel or pellets to participate in the C category mines which were cancelled by it in April 2013 due to gross irregularities. Besides, it also restrained a consortium of end users from participating in the first stage of auction of the 15 cancelled mines, which is expected to yield about 6-7 million metric tonne of iron ore.

While giving conditional nod for the auction, a three-judge bench comprising Justices Ranjan Gogoi, RK Agrawal and NV Ramana said the Karnataka government should commence and complete the auction process within 32 weeks from now.

While asking the state government to fix the reserve price at 35% of the IBM published average price, the apex court also gave liberty to it to reduce the reserve price if it failed to get the bid above the reserve price.

However, it clarified that permissible annual production by the company has to be as prescribed in the R&R plan.

“Successful bidders will produce and dispatch 50% of permissible production” and whenever dispatch is below, then irrespective of the quantity the successful company will pay as per the original dispatch quantity, the bench stated in its order. The judges added that sale proceeds of the auction, as of now, will be credited to a consolidated fund and in the count of special purpose vehicle in the ratio of 75% and 25%, respectively.

Meanwhile, it asked the Central Empowered Committee (CEC) to consider the plea of Sesa Sterlite for raising the present cap of 2.29 mmt to 6 mmt as approved by the environment ministry.

In April 2013, the court scrapped mining in 51 mines where the highest amount of irregularities were found. These mines were categorised as Category C mines. Categories A and B iron ore mines with no or lesser degree of irregularities were allowed to resume mining subject to reclamation, rehabilitation and compensation payments.

The court had on Wednesday asked the secretary, department of mines, Karnataka, to be present in court on Thursday to assist it. It also dismissed various petitions filed by B category mines seeking review of its April 2013 order.

On Wednesday, while rejecting a batch of 39 review petitions filed by C category mining companies, the apex court had said it found “no compelling reasons” to review its April 18, 2013, order that allowed some mines to resume functioning, while cancelling leases of several others.

It had banned mining of iron ore in Karnataka in July 2011 following allegations of illegal mining that had resulted in large scale abuse of the environment. Subsequently, the court ordered resumption in mining activities in Karnataka in April 2013 with a cap on production of 30 mtpa after July 2011.